SLMA Supports PPP Loan Forgiveness Technical Correction
On August 4, SLMA joined more than 170 organizations in sending a letter to Congressional leadership asking Congress to include a technical correction addressing the tax treatment of loan forgiveness under the Paycheck Protection Program (PPP) in the next COVID stimulus package.
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, PPP loans were eligible for forgiveness of indebtedness for amounts equal to certain payroll, mortgage interest, rent, and utility payments made during a prescribed period, with any resulting cancelled indebtedness excluded from the borrower's taxable income. However, Treasury's IRS Notice 2020-32 effectively overturned this policy by denying these borrowers the ability to deduct the same expenses that qualified them for the loan forgiveness.
In addition to a bi-partisan letter to Treasury Secretary Mnuchin from the Chairmen of the House and Senate tax writing committees asking him to correct the issue, the Small Business Expense Protection Act was introduced in the House and Senate, with a broad bi-partisan support. The bill was included in the House of Representatives most recent coronavirus stimulus package, but was not included in the Senate's legislation, which was introduced last week. The issue continues to be part of the on-going negotiations between the House, Senate, and Administration.